Rating Rationale
February 05, 2025 | Mumbai
R K Chavan Infrastructure Private Limited
Ratings upgraded to 'Crisil BBB+/Stable/Crisil A2'; Rated amount enhanced for Bank Debt
 
Rating Action
Total Bank Loan Facilities RatedRs.250 Crore (Enhanced from Rs.100 Crore)
Long Term RatingCrisil BBB+/Stable (Upgraded from 'Crisil BBB/Stable')
Short Term RatingCrisil A2 (Upgraded from 'Crisil A3+')
Note: None of the Directors on Crisil Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings.
1 crore = 10 million
Refer to Annexure for Details of Instruments & Bank Facilities

Detailed rationale

Crisil Ratings has upgraded its ratings on the bank loan facilities of R K Chavan Infrastructure Private Limited (RKCIPL) to ‘CRISIL BBB+/Stable/CRISIL A2’ from ‘Crisil BBB/Stable/Crisil A3+’.

 

The upgrade reflects the company’s strong business risk profile as indicated by robust order book of Rs 2,188 crore as of December 2024 and timely execution supporting improvement in topline. The company’s entrance into tunneling projects and completion of projects has helped for higher qualification resulting in better profitability and efficient resource allocation. The company has been recently been awarded a HAM project which should support steady revenue over the medium term.

 

The ratings continue to reflect the extensive experience of the promoters in the civil construction industry, healthy order book providing revenue visibility, and comfortable financial risk profile. These strengths are partially offset by susceptibility to tender-based operations and large working capital requirement.

Analytical approach

Crisil Ratings has moderately consolidated the business and financial risk profiles of RKCIPL and its special purpose vehicle (SPV), Bhoyegaon Gadchandur Roadways Pvt Ltd (BGRPL). This is because both the entities have common management and operational and financial linkages. Crisil Ratings has factored in the funding aid to the extent of support required and other cash flow.

 

Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation.

Key rating drivers and detailed description

Strengths:

  • Extensive experience of the promoters: Presence of more than two decades in the civil construction business has enabled the promoters to develop a strong understanding of market dynamics and establish healthy relationships with suppliers and customers. This led to a compound annual growth rate of ~24% in revenue over the three fiscals through 2024 to Rs 457.5 crore. The operating margin was 13.7% in fiscal 2024.

 

  • Healthy order book providing revenue visibility: Order book of Rs 2,188 crore as of April 2024, which is majorly to be executed over the next 24-36 months, provides significant revenue visibility for the medium term.SPV BGRPL has received three annuities and is self sustainable. RKCIPL has recently been awarded a HAM project for which the company has formed a joint venture. The appoinment date is expected soon.

 

  • Comfortable financial risk profile: Lower reliance on external funds and healthy net worth supports financial risk profile as reflected in gearing of 0.60 time as on March 31, 2024. Healthy operating profitability led to robust debt protection metrics with interest coverage and net cash accrual to total debt ratio of 6.99 times and 0.63 time, respectively, in fiscal 2024. The metrics are expected to improve further over the medium term with steady accretion to reserve. Despite equity commitments towards the SPVs, the financial structure of the company is expected to be comfortable.

 

Weaknesses:

  • Susceptibility to tender-based operations: Revenue and profitability entirely depend on the ability to win tenders. Also, entities in this segment face intense competition, requiring them to bid aggressively to get contracts, which restricts operating margin. Given the cyclicality inherent in the construction industry, ability to maintain profitability through operating efficiency becomes critical. Maintenance of healthy profitability will be monitorable over the medium term.

 

  • Working capital-intensive operations: Gross current assets were at 144 days as on March 31, 2024, owing to tender-driven business and higher receivables and retenetion as majority of reveneu is booked during Q4, and clients being central and state government entities. Improvement in working capital cycle over the medium term will be closely monitored.

Liquidity: Adequate

Bank limit utilisation was moderate at 79.11% on average for the 10 months ended December 31, 2024. Annual cash accrual is expected to be Rs 55-70 crore against yearly term debt obligation of Rs 20-25 crore over the medium term.
 

The current ratio was moderate at 1.08 times as on March 31, 2024.

Outlook: Stable

Crisil Ratings believes RKCIPL will continue to benefit from the extensive experience of its promoters and established relationships with clients.

Rating sensitivity factors

Upward factors:

  • Increase in revenue and sustenance of healthy profitability, leading to cash accrual more than Rs 65 crore
  • Efficient working capital cycle along with comfortable financial risk profile
  • Sustenance of healthy order book to turnover ratio on consistent basis

 

Downward factors:

  • Decline in revenue or profitability, leading to cash accrual less than Rs 35 crore
  • Large debt-funded capital expenditure, leading to gearing more than 1 time

About the company

Incorporated in 2011, RKCIPL is owned and managed by Rajkumar Chavan and Meena Rajkumar Chavan. Based in Pune, Maharashtra, the company constructs roads and bridges. BGRPL is a hybrid annuity model SPV carrying out a project under Maharashtra Public Works Department for upgrade of the 2-lane Bhoyegaon-Gadchandur Road (SH-373), total length of 21 km (3rd call); and Gadchandur-Patan-Wani Road (SH-373), total length of 53 km under hybrid annuity package.

Key financial indicators

As on / for the period ended March 31

Unit

2024

2023

Operating income

Rs crore

457.65

433.85

Reported profit after tax (PAT)

Rs crore

34.53

26.96

PAT margin

%

7.55

6.21

Adjusted debt/adjusted networth

Times

0.60

0.74

Interest coverage

Times

6.99

6.30

Any other information: Not Applicable

Note on complexity levels of the rated instrument:
Crisil Ratings` complexity levels are assigned to various types of financial instruments and are included (where applicable) in the 'Annexure - Details of Instrument' in this Rating Rationale.

Crisil Ratings will disclose complexity level for all securities - including those that are yet to be placed - based on available information. The complexity level for instruments may be updated, where required, in the rating rationale published subsequent to the issuance of the instrument when details on such features are available.

For more details on the Crisil Ratings` complexity levels please visit www.crisilratings.com. Users may also call the Customer Service Helpdesk with queries on specific instruments.

Annexure - Details of Instrument(s)

ISIN Name Of Instrument Date Of Allotment Coupon Rate (%) Maturity Date Issue Size (Rs. Crore) Complexity Levels Rating Outstanding with Outlook
NA Bank Guarantee NA NA NA 157.00 NA Crisil A2
NA Cash Credit NA NA NA 42.50 NA Crisil BBB+/Stable
NA Proposed Non Fund based limits NA NA NA 50.50 NA Crisil A2

Annexure – List of entities consolidated

Names of entities consolidated

Extent of consolidation

Rationale for consolidation

Bhoyegaon Gadchandur Roadways Pvt Ltd

Moderate

Common management and operational and financial linkages

R K Chavan Infrastructure Pvt Ltd

Moderate

Common management and operational and financial linkages
Annexure - Rating History for last 3 Years
  Current 2025 (History) 2024  2023  2022  Start of 2022
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Fund Based Facilities LT 42.5 Crisil BBB+/Stable   -- 29-05-24 Crisil BBB/Stable 08-08-23 Crisil BBB/Stable   -- --
      --   -- 30-04-24 Crisil BB+ /Stable(Issuer Not Cooperating)*   --   -- --
Non-Fund Based Facilities ST 207.5 Crisil A2   -- 29-05-24 Crisil A3+ 08-08-23 Crisil A3+   -- --
      --   -- 30-04-24 Crisil A4+ (Issuer Not Cooperating)*   --   -- --
All amounts are in Rs.Cr.
* - Issuer did not cooperate; based on best-available information
Annexure - Details of Bank Lenders & Facilities
Facility Amount (Rs.Crore) Name of Lender Rating
Bank Guarantee 75 Union Bank of India Crisil A2
Bank Guarantee 22 Central Bank Of India Crisil A2
Bank Guarantee 60 Union Bank of India Crisil A2
Cash Credit 25 Union Bank of India Crisil BBB+/Stable
Cash Credit 15 Punjab National Bank Crisil BBB+/Stable
Cash Credit 2.5 Central Bank Of India Crisil BBB+/Stable
Proposed Non Fund based limits 50.5 Not Applicable Crisil A2
Criteria Details
Links to related criteria
CRISILs Bank Loan Ratings - process, scale and default recognition
Rating criteria for manufaturing and service sector companies
CRISILs Approach to Financial Ratios
Rating Criteria for Construction Industry
CRISILs Criteria for rating short term debt
CRISILs Criteria for Consolidation

Media Relations
Analytical Contacts
Customer Service Helpdesk

Ramkumar Uppara
Media Relations
Crisil Limited
M: +91 98201 77907
B: +91 22 6137 3000
ramkumar.uppara@crisil.com

Sanjay Lawrence
Media Relations
Crisil Limited
M: +91 89833 21061
B: +91 22 6137 3000
sanjay.lawrence@crisil.com


Himank Sharma
Director
Crisil Ratings Limited
B:+91 124 672 2000
himank.sharma@crisil.com

Ankita Gupta
Associate Director
Crisil Ratings Limited
B:+91 22 6137 3000
ankita.gupta@crisil.com

Bindu Bogavilli
Rating Analyst
Crisil Ratings Limited
B:+91 20 4018 1900
Bindu.Bogavilli@crisil.com		Timings: 10.00 am to 7.00 pm
Toll free Number:1800 267 1301

For a copy of Rationales / Rating Reports:
CRISILratingdesk@crisil.com
 
For Analytical queries:
ratingsinvestordesk@crisil.com

 

Note for Media:
This rating rationale is transmitted to you for the sole purpose of dissemination through your newspaper/magazine/agency. The rating rationale may be used by you in full or in part without changing the meaning or context thereof but with due credit to Crisil Ratings. However, Crisil Ratings alone has the sole right of distribution (whether directly or indirectly) of its rationales for consideration or otherwise through any media including websites and portals.


About Crisil Ratings Limited (A subsidiary of Crisil Limited, an S&P Global Company)

Crisil Ratings pioneered the concept of credit rating in India in 1987. With a tradition of independence, analytical rigour and innovation, we set the standards in the credit rating business. We rate the entire range of debt instruments, such as bank loans, certificates of deposit, commercial paper, non-convertible/convertible/partially convertible bonds and debentures, perpetual bonds, bank hybrid capital instruments, asset-backed and mortgage-backed securities, partial guarantees and other structured debt instruments. We have rated over 33,000 large and mid-scale corporates and financial institutions. We have also instituted several innovations in India in the rating business, including ratings for municipal bonds, partially guaranteed instruments and infrastructure investment trusts (InvITs).

Crisil Ratings Limited ('Crisil Ratings') is a wholly-owned subsidiary of Crisil Limited ('Crisil'). Crisil Ratings Limited is registered in India as a credit rating agency with the Securities and Exchange Board of India ("SEBI").

For more information, visit www.crisilratings.com 

 



About Crisil Limited

Crisil is a leading, agile and innovative global analytics company driven by its mission of making markets function better. 

It is India’s foremost provider of ratings, data, research, analytics and solutions with a strong track record of growth, culture of innovation, and global footprint.

It has delivered independent opinions, actionable insights, and efficient solutions to over 100,000 customers through businesses that operate from India, the US, the UK, Argentina, Poland, China, Hong Kong and Singapore.

It is majority owned by S&P Global Inc, a leading provider of transparent and independent ratings, benchmarks, analytics and data to the capital and commodity markets worldwide.

For more information, visit www.crisil.com

Connect with us: TWITTER | LINKEDIN | YOUTUBE | FACEBOOK

CRISIL PRIVACY NOTICE
 
Crisil respects your privacy. We may use your contact information, such as your name, address and email id to fulfil your request and service your account and to provide you with additional information from Crisil. For further information on Crisil's privacy policy please visit www.crisil.com.



DISCLAIMER

This disclaimer is part of and applies to each credit rating report and/or credit rating rationale ('report') provided by Crisil Ratings Limited ('Crisil Ratings'). For the avoidance of doubt, the term 'report' includes the information, ratings and other content forming part of the report. The report is intended for use only within the jurisdiction of India. This report does not constitute an offer of services. Without limiting the generality of the foregoing, nothing in the report is to be construed as Crisil Ratings provision or intention to provide any services in jurisdictions where Crisil Ratings does not have the necessary licenses and/or registration to carry out its business activities. Access or use of this report does not create a client relationship between Crisil Ratings and the user.

The report is a statement of opinion as on the date it is expressed, and it is not intended to and does not constitute investment advice within meaning of any laws or regulations (including US laws and regulations). The report is not an offer to sell or an offer to purchase or subscribe to any investment in any securities, instruments, facilities or solicitation of any kind to enter into any deal or transaction with the entity to which the report pertains. The recipients of the report should rely on their own judgment and take their own professional advice before acting on the report in any way.

Crisil Ratings and its associates do not act as a fiduciary. The report is based on the information believed to be reliable as of the date it is published, Crisil Ratings does not perform an audit or undertake due diligence or independent verification of any information it receives and/or relies on for preparation of the report. THE REPORT IS PROVIDED ON “AS IS” BASIS. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAWS, CRISIL RATINGS DISCLAIMS WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR OTHER WARRANTIES OR CONDITIONS, INCLUDING WARRANTIES OF MERCHANTABILITY, ACCURACY, COMPLETENESS, ERROR-FREE, NON-INFRINGEMENT, NON-INTERRUPTION, SATISFACTORY QUALITY, FITNESS FOR A PARTICULAR PURPOSE OR INTENDED USAGE. In no event shall Crisil Ratings, its associates, third-party providers, as well as their directors, officers, shareholders, employees or agents be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of any part of the report even if advised of the possibility of such damages.

The report is confidential information of Crisil Ratings and Crisil Ratings reserves all rights, titles and interest in the rating report. The report shall not be altered, disseminated, distributed, redistributed, licensed, sub-licensed, sold, assigned or published any content thereof or offer access to any third party without prior written consent of Crisil Ratings.

Crisil Ratings or its associates may have other commercial transactions with the entity to which the report pertains or its associates. Ratings are subject to revision or withdrawal at any time by Crisil Ratings. Crisil Ratings may receive compensation for its ratings and certain credit-related analyses, normally from issuers or underwriters of the instruments, facilities, securities or from obligors.

Crisil Ratings has in place a ratings code of conduct and policies for managing conflict of interest. For more detail, please refer to: https://www.crisil.com/en/home/our-businesses/ratings/regulatory-disclosures/highlighted-policies.html. Public ratings and analysis by Crisil Ratings, as are required to be disclosed under the Securities and Exchange Board of India regulations (and other applicable regulations, if any), are made available on its websites, www.crisilratings.com and https://www.ratingsanalytica.com (free of charge). Crisil Ratings shall not have the obligation to update the information in the Crisil Ratings report following its publication although Crisil Ratings may disseminate its opinion and/or analysis. Reports with more detail and additional information may be available for subscription at a fee.  Rating criteria by Crisil Ratings are available on the Crisil Ratings website, www.crisilratings.com. For the latest rating information on any company rated by Crisil Ratings, you may contact the Crisil Ratings desk at crisilratingdesk@crisil.com, or at (0091) 1800 267 1301.

Crisil Ratings uses the prefix 'PP-MLD' for the ratings of principal-protected market-linked debentures (PPMLD) with effect from November 1, 2011, to comply with the SEBI circular, "Guidelines for Issue and Listing of Structured Products/Market Linked Debentures". The revision in rating symbols for PPMLDs should not be construed as a change in the rating of the subject instrument. For details on Crisil Ratings' use of 'PP-MLD' please refer to the notes to Rating scale for Debt Instruments and Structured Finance Instruments at the following link: https://www.crisilratings.com/en/home/our-business/ratings/credit-ratings-scale.html